One amazing irony in contemporary corporate life involves performance management, which is omnipresent for CEOs and management teams, and too often absent for corporate directors. Directors preach — even demand — accountability for management teams but seem to avoid the fact that often too little accountability and measurement ever seems to find its way to directors themselves.

It is time for a new wave of governance thinking to be applied to directors.

Let’s remember a point that directors often forget. Directors are not the “top of the food chain” when it comes to governance. Directors are simply agents “hired” by shareholders to protect and advance the Corporation’s interests.

Which prompts an important question: How well are directors doing at this job? How do we measure their performance? And what do we do when their performance is poor?

Few boards seriously address these questions. How do we get them to do so?

To get serious about director accountability, high-performing boards should begin by issuing a report — separate from the annual report — which details how directors are adding value and performing their duties.

Sure, every chair typically writes a letter at the front of the annual review, but read it carefully — is usually packed with commentary about great things that the companyand the management teamdid. There is typically little — sometimes nothing — about the board’s goals, and whether the board achieved them. Only a few best practice boards (maybe 5%) comment on how the board made some improvements to governance and even then the detail is pretty weak.

Imagine a short, hard-hitting five to 10-page governance report entirely separate from the annual report that covered:

The board’s annual goals, separate from management’s goals. What are the most important goals the board set out to achieve this year, and how did it measure up? Say better oversight over a particular division was a goal; the board could explain how it went about that and what the results were.

Board composition and size. How good is board composition from a skills, diversity and experience perspective? What is the board’s plan to improve it, and how does it think it is progressing toward that goal? Even elaborating on how the board is thinking about the skills it needs would be helpful for directors. Also, the board’s size could be discussed annually. Most boards are too big and perhaps annual reflection on this topic could help to shrink them.

CEO evaluation, coaching, accountability, review.Arguably the most important role of any board is the selection, evaluation, and ongoing assessment of the CEO. Why is this process invisible to shareholders? Many of these conversations are confidential, and properly so, but the board could release significant details about the mechanism, how rigorous it is, and how it relates to the CEO’s compensation. For example, how many times a year does the board chair sit down with the CEO and review 360-degree performance feedback? Does it ever happen? Is the board doing anything to collect feedback on the CEO from customers or suppliers? By reporting on their activity here, excellent boards could distinguish themselves from less talented boards, and perhaps earn the company’s investors a premium for their high-quality governance.

Board meetings, attendance, use of time. Public companies provide details on director attendance but shareholders care about more than just who shows up, and how often. A governance report could provide additional detail on how the board uses its time. It also could detail whether the board spent time on additional oversight topics of interest to shareholders. Importantly, this section could cover the Board’s uses of committees – how effectively committees are being used, for example.

Board performance management. Public boards report whether they have a director review process, and how it works. But can’t we do better than this? Owners deserve to know more about how directors contribute―as well as the consequences for non-contributing members. Boards could release aggregated data on how directors were rated by their peers, the board chair, or independent assessment professional. This sounds impossible now – but why? Don’t directors deserve to understand how other directors are performing? Releasing the results would hold directors’ feet to the fire and perhaps accelerate the process of removing poor members.

A report like the one we describe could help usher in a wave of better governance and better Directors.

Shaun Francis is chairman of preventative health clinic Medcan, one of Canada’s 50 Best Managed Companies. John Kelleher is president & CEO of student apparel group RHB Group LP and a former consultant at McKinsey & Co. Both are members of the Young Presidents’ Organization and have served as CEOs and directors.

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